Railroads  and  Wages 

OR 

THE  DEBT  THAT  LABOR  OWES  TO 
TRANSPORTATION 

FOURTH  EDITION 

By  GUY  MORRISON  WALKER 

AUTHOR  OF 

41  WHAT  SHALL  WE  BUY?” 

“SCIENTIFIC  INVESTIGATION  OF  INVESTMENTS” 

“  TRUST  COMPANIES  ”  “  AMERICAN  MUNICIPAL  BONDS  ” 

“INTERURBAN  RAILWAYS  AS  AN  INVESTMENT” 
“SINKING  FUNDS”  “THE  POSITION  OF  INDUSTRIALS” 

“GOLD  BRICK  FOREIGN  LOANS”  ETC.,  ETC. 


\Js  v-  S  rA 


Copyright,  1902 

By  G.  M.  Walker 


EDWARD  V.  BROKAW  *  BRO. 
PRINTERS,  ETC. 

54  BROAD  ST.,  N.  Y. 


18 Mrfjf  JSUaa. 


RAILROADS  AND  WAGES, 

OR 

THE  DEBT  THAT  LABOR  OWES  TO 
TRANSPORTATION. 

By  Guy  Morrison  Walker. 


^Tp  HE  idea  that  our  great  railroad  corpora¬ 
ls  tions  are  the  enemies  of  labor  and  the 
. oppressors  of  business  has  become  deep- 


£L 


seated.  These  railroad  corporations  have  be¬ 
come  so  great  and  powerful  and  seem  to  ac- 

C°?if1!fh  Jhdr  Cnds  by  such  inexplicable 
methods  that  many  have  come  to  believe  that 
they  are  a  menace  to  good  government.  It  is 
elieved  that  they  are  seeking  to  increase  their 
power  and  extend  their  influence  for  the  pur- 
pose  of  still  further  levying  tribute  upon  the 
labor  and  commerce  of  the  country  and  even 
more  effectually  crushing  those  who  oppose 
them  and  protest  against  their  discriminating 
rates  than  they  have  been  able  to  do  in  the  past 
Recognizing  this  fully,  every  State  in  the 
Union  and  Congress  itself,  has,  in  response  to 
popular  demand,  enacted  laws  restraining  the 
combination  and  consolidation  of  railroads  and 
rates-  Many  decisions  the 

tionaliJvTd'*-  h"'  S“Stalil«l  the  constito- 
tionality  and  justice  of  these  laws.  Yet  in 

namVs  HeV'OUS  ***  the  *reater  raiIr0^  com” 
to  be  aVCi  S°ne  °n  absorblnS  Iines  that  aspired 
to  be  rivals,  consolidating  with  competitors, 


Feeling 

Against 

Railroads. 


Hostile 

Laws 

Sustained. 


4 


Railroads  and  Wages 


But 

Consolida¬ 
tion  Contin¬ 
ues. 


Corrupt 

Methods 

Suspected. 


Northern 

Securities 

Case. 


buying  up  connecting  links,  building  feeders 
and  swallowing  up  all  manner  of  lesser  rail¬ 
road  companies  until,  while  railroad  mileage 
has  greatly  increased  the  number  of  companies 
has  decreased,  until  almost  the  entire  mileage 
of  the  country  is  controlled  by  a  dozen  groups 
of  companies,  and  all  this  has  been  accomp¬ 
lished  in  the  face  of  hostile  legislation.  In 
addition  to  this  the  companies  have,  in  some 
mysterious  way,  evaded  or  anticipated  all  the 
attempts  of  commissions  to  regulate  their  rates. 

It  is  not  strange,  therefore,  that  the  people 
have  come  to  believe  that  all  this  has  been  ac¬ 
complished  by  the  corruption  of  the  courts  and 
other  public  officials  by  the  railroad  companies 
and  that  popular  feeling  has  been  growing 
stronger  and  popular  clamor  louder,  until  there 
is  no  surer  method  by  which  a  politician  may 
leap  into  public  prominence  and  favor  than  by 
leading  an  attack,  even  though  an  unsuccessful 
one,  against  these  same  railroad  corporations 
whose  growing  power  seems  to  threaten  the 
very  liberties  of  the  people. 

The  announcement  of  the  organization  of  the 
Northern  Securities  Company  for  the  purpose 
of  securing  a  single  ownership  of  two  great 
competing  railroad  systems  in  the  Northwest, 
was  such  a  transparent  evasion  of  the  laws  to 
prevent  such  a  consummation  that  the  whole 


Railroads  and  Wages 


5 


country  was  aroused,  and  the  President  himself 
not  content  to  await  the  outcome  of  the  actions 
begun  by  the  several  States  through  which  the 
systems  run,  instructed  the  Attorney-General 
of  the  United  States  to  take  steps  at  once  to 
prevent  its  accomplishment. 

The  decision  of  the  cases  questioning  the 
legality  of  this  action  is  of  great  importance  to 
American  labor  and  really  involves  the  contin¬ 
uance  of  American  industrial  supremacy  over 
the  rest  of  the  world.  Inasmuch  as  the  ques¬ 
tions  involved  may  become  of  political  as  they 
now  are  of  economic  importance,  this  study  is 
offered  to  the  American  people  with  the  hope 
that  the  facts  that  it  contains  may  help  to  guide 
aright  their  political  judgment  and  save  them 
from  following  a  course  which,  if  persisted  in, 
can  but  result  in  their  reduction  to  a  condition 
of  industrial  slavery. 

It  is  a  well  known  fact,  though  one  that  we 
seldom  stop  to  recall,  that  the  price  of  the 
finished  product  in  the  markets  of  the  world  is 
made  up  of  the  cost  of  manufacture  plus  the 
cost  of  transportation.  Reduced  to  its  lowest 
analysis,  the  cost  of  every  manufactured  pro¬ 
duct  is  simply  the  cost  of  the  labor  to  produce 
it,  for  the  cost  of  raw  material  is  simply  the 


Decision 

Involves 

Industrial 

Future. 


Labor  in 
Cost  of 
Product. 


6 


Railroads  and  Wages 


Transporta¬ 
tion  also 
Labor. 


Modern 

Labor 

Escapes 

Burden. 


cost  of  the  labor  to  produce  it,  whether  it  be 
digging  ore  from  the  mines,  gathering  ivory- 
in  the  forests  of  Africa,  or  shearing  wool  from 
the  backs  of  sheep. 

Under  primitive  conditions  even  transporta¬ 
tion  is  simply  labor  and  the  cost  of  transporta¬ 
tion  is  simply  the  cost  of  the  human  labor 
necessary  to  carry  the  finished  product  to  mar¬ 
ket.  This  condition  is  still  to  be  seen  in  oriental 
countries,  particularly  in  China,  where  the 
greater  part  of  China’s  tea  crop  is  borne  to  the 
waterways  on  the  backs  of  men,  and  in  Africa, 
where  strings  of  negroes  still  bear  to  the  coast 
the  ivory  gathered  in  the  forests  of  the  interior. 

By  the  development  of  modern  means  of 
transportation,  labor  in  civilized  communities 
has  been  relieved  of  the  burden  of  transporting 
its  manufactured  products  to  market  by  the 
costly  and  laborious  methods  that  still  prevail 
in  less  favored  communities.  The  farmer  of 
Kansas  and  Nebraska  sells  his  great  surplus  of 
wheat  and  corn  at  a  good  profit  in  the  markets 
of  Europe  because  American  railroads  trans¬ 
port  his  grain  from  these  farms  fifteen  hundred 
miles  in  the  interior  down  to  the  coast  at  a  cost 
of  approximately  one-third  of  one  cent  per  ton 
mile.  In  China  the  farmer  in  the  interior  raises 
no  more  of  any  particular  product  than  his 
immediate  community  is  able  to  consume  for 


Railroads  and  Wages 


7 


the  reason  that  the  means  of  transportation 
that  there  exist  are  so  expensive  that  even  his 
small  surplus  is  unable  to  pay  its  way  to  a 
nearby  market. 

It  is  hard  for  those  who  are  familiar  with  the 
modern  means  and  methods  of  transportation 
to  realize  how  much  they  owe  thereto  and  how 
much  the  wage  that  is  paid  to  labor  in  civilized 
communities  is  the  result  of  the  introduction 
of  these  modern  methods  of  transportation. 
The  peculiar  industrial  and  economic  conditions 
which  prevail  in  China  to-day  are  due  to  the 
primitive  and  expensive  methods  of  transporta¬ 
tion  that  there  exist,  for  practically  her  entire 
commerce  is  carried  on  the  backs  of  men  or  by 
such  primitive  means  of  conveyance  as  wheel¬ 
barrows,  carts  or  pack  animals. 

The  province  of  Honan  in  China,  lying  about 
six  hundred  miles  inland  from  the  coast,  with 
an  area  about  equal  to  that  of  the  State  of  New 
York,  but  with  a  population  of  over  twenty-two 
millions,  has  a  foreign  commerce  that  aggre¬ 
gates  only  about  five  hundred  thousand  dollars 
a  year.  The  great  province  of  Sze  Chuan,  with 
an  area  of  two  hundred  thousand  square  miles 
and  a  population  equal  to  that  of  the  United 
States,  is  practically  an  unknown  world,  be¬ 
cause  almost  its  only  means  of  communication 
is  by  the  small  boats  that  desend  the  Yang  Tse 


Present 
Wages  Re¬ 
sult  of 
Modern 
Transporta¬ 
tion. 


Example  of 
China. 


8 


Railroads  and  Wages 


Labor 
Cheap  but 
Cost  High. 


Wages  De¬ 
pend  on 
Breadth  of 
Market. 


Transporta¬ 
tion  Facili¬ 
ties  of  the 
World. 


river  and  the  returning  boatmen  who  trudge 
into  the  interior  carrying  on  their  backs  such 
small  bundles  as  they  are  able  to  bear.  Al¬ 
though  the  men  engaged  in  this  traffic  are  only 
paid  about  eight  cents  a  day  for  their  work  and 
they  board  themselves  out  of  that  pittance,  this 
method  of  transportation  costs  about  ten  cents 
per  ton  mile,  or  nearly  fifteen  times  the  average 
freight  charge  of  the  American  railroads  and 
more  than  thirty  times  what  American  railroads 
charge  for  the  transportation  of  grain. 

The  value  of  every  commodity  depends  upon 
the  breadth  of  the  market  for  it  and  particu¬ 
larly  is  this  true  of  the  value  of  labor.  For 
labor  necessarily  depends  for  its  value  on  the 
facilities  which  exist  for  transporting  its  pro¬ 
ducts  to  market.  Thus  we  see  that  in  China 
where  the  facilities  for  transportation  are  the 
poorest  in  the  world  we  find  the  cheapest  labor, 
cheap  because  it  is  confined  for  a  market  for  its 
products  to  the  territory  immediately  surround- 
it  and  is  cut  off  from  the  markets  of  the 
world  by  the  high  cost  of  reaching  them.  In 
all  China  there  are  in  operation  less  than  one 
thousand  miles  of  railroad. 

The  following  table  gives  the  population, 
total  miles  of  railroad  and  the  miles  of  railroad 
for  each  ten  thousand  of  population  in  the 
leading  industrial  countries  of  the  world: 


Railroads  and  Wages 


9 


Miles  Miles 

Country.  Population,  of  Road,  per  10,000 
Great  Britain.  41,454,578  21,855  5 .27 

France  .  38,641,000  26, 234  6.78 

Germany  -  56,343,000  21,392  5.57 

Austria  .  47,102,000  22,545  478 

Italy  .  32,449,000  9772  3-0i 

Russia  . 128,932,000  28,589  2.21 

United  States.  76,303,000  202,000  26.47 


It  will  be  seen  from  the  preceding  table  that  America 
the  average  man  in  America  is  four  times  better  Four  Times 
served  with  railroad  transportation  facilities  Better 
than  the  average  Frenchman,  who  next  to  our-  Served, 
selves  are  the  best  served  by  their  railroads  of 
any  people  in  the  world;  while  the  average 
American  is  five  times  better  served  in  this  re¬ 
spect  than  is  the  average  inhabitant  of  Great 
Britain  or  Germany,  who  are  our  chief  indus¬ 
trial  rivals.  From  this  it  is  easy  to  see  how 
much  greater  is  the  opportunity  of  the  average 
American  to  market  the  products  of  his  labor 
and  how  much  wider  is  the  market  which  these 
products  may  reach. 

Transportation  rates  are  not  only  governed  Rates  De- 
by  the  methods  of  transportation  employed,  pend  on 
but  in  civilized  countries  where  practically  the  Skill  and 
same  methods  of  transportation  prevail  they  Capitaliza- 
are  governed  by  skill  in  operation  and  by  the  tion. 
fixed  charges  that  it  is  necessary  to  pay  upon 


10 


Railroads  and  Wages 


American 
Railroad 
Capitaliza¬ 
tion  Low. 


Fixed  Char¬ 
ges  High  in 
Europe. 


the  investment  necessary  to  build  up  the  trans¬ 
portation  systems.  No  where  else  in  the  world 
has  railroad  operation  been  reduced  to  the 
science  that  it  has  in  this  country,  where  our 
train  loads  average  almost  double  those  of 
Europe  and  our  ton  mile  rates  are  not  only  the 
lowest,  but  are  scarcely  one-third  those  of  our 
nearest  competitors.  In  all  this  the  American 
laborer  has  a  great  advantage  over  the  laborer 
in  any  other  part  of  the  world.  The  average 
capitalization  of  American  railroads  is  only 
$61,884,  while  the  average  capitalization  of  the 
railroads  of  Europe  is  almost  twice  that  sum, 
amounting  to  $113,890  per  mile,  and  the  rail¬ 
roads  of  Great  Britain  and  Ireland  are  capital¬ 
ized  at  $268,051  per  mile.  This  means  that  the 
charge  of  American  railroads  upon  the  pro¬ 
ducts  of  labor  for  transporting  them  to  market, 
necessary  to  pay  the  fixed  charge  upon  the  in¬ 
vestment  in  the  roads  is  only  one-half  as  much 
as  European  railroads  must  tax  the  product 
of  their  labor  in  order  to  place  that  product  in 
the  market  and  only  one-fourth  as  much  as 
English  railroads  are  forced  to  tax  the  products 
of  English  labor,  in  order  to  pay  their  fixed 
charges  or  the  interest  upon  the  sum  invested 
in  them. 

While  the  market  for  any  given  product  is 
controlled  by  that  nation  which  can  combine 


Railroads  and  Wages 


ii 


the  lowest  cost  of  manufacture,  together  with 
the  lowest  cost  of  transportation  to  market; 
the  price  of  that  product  in  the  market,  is  gov¬ 
erned  by  the  next  to  the  lowest  possible  com¬ 
bination  of  these  two  elements,  or  in  other 
words,  by  the  cost  to  the  nearest  competitor. 
That  nation  which  makes  the  cheapest  and 
reaches  the  market  cheapest  need  not  sell  its 
products  as  cheap  as  they  can  be  made  and 
delivered  in  order  to  control  the  market,  but 
only  to  sell  a  little  cheaper  than  its  nearest 
competitor  can  make  and  deliver.  After  one 
of  the  competitors  for  a  market  has  secured 
control  of  it  by  reducing  the  sum  of  his  cost 
of  making  and  delivering  below  that  of  his 
nearest  rival,  he  may  thereafter,  by  the  reduc¬ 
tion  of  one  of  the  elements  of  cost,  be  able  to 
increase  his  profit  without  danger  to  his  con¬ 
trol  of  the  market.  He  may  even  reduce  one 
element  of  cost  so  much  as  to  be  enabled  to 
increase  the  other  element  of  cost  and  still 
make  the  combined  cost  less  than  it  was  before. 
In  other  words,  when  one  country  has  secured 
control  of  the  market  for  any  given  commodity 
by  being  able  to  make  and  deliver  it  cheaper 
than  it  can  be  done  by  any  industrial  rival,  that 
country  may,  by  reducing  its  cost  of  transporta¬ 
tion  to  market,  greatly  increase  its  profit  and 
still  control  the  market  without  in  any  manner 


Lowest 
Cost  Con¬ 
trols  Mar¬ 
ket. 


Price  fixed 
by  Com¬ 
petitor. 


Lower 
Rates  Make 
Higher 
Wages. 


12 


Railroads  and  Waees 


reducing  the  price  of  its  wages.  It  may,  in  fact, 
so  materially  reduce  the  cost  of  transportation 
that  wages  in  that  country  may  be  materially 
increased  without  endangering  its  control  of 
the  markets  of  the  world. 

Rates  and  It  is  just  this  that  American  railroads  have 
Wages  of  enabled  us  to  do  in  the  markets  of  the  world 
the  World,  and  what  this  means  to  American  labor  is 
shown  by  the  following  table,  which  shows 
the  cost  of  transportation  per  ton  mile  and  the 
average  wage  per  day  that  is  paid  to  labor  in 
the  leading  countries  of  the  world: 

Cost  of  transportation 


per  ton  mile 

Wages 

Country. 

in  cents. 

per  day. 

China  . 

$  .10 

Japan  . 

. 05 

.23 

Russia  . 

. .  .022 

•34 

Italy  . 

. 024 

.26 

Austria  . . 

. 0225 

•So 

Germany  . 

. 0150 

.90 

France  . 

. 0190 

.80 

England  . 

. 0260 

1.04 

United  States  . . 

. 0069 

2.60 

From  this  it  will  be  seen  that  in  China,  where 
the  cost  of  transportation  amounts  to  ten  cents 
per  ton  mile,  wages  only  average  ten  cents  per 
day.  In  Japan,  which  by  reason  of  a  small  rail¬ 
road  system  and  fair  means  of  water  commui- 


Railroads  and  Wages 


13 


cation,  has  reduced  its  average  cost  of  trans¬ 
portation  to  five  cents  per  ton  mile,  the  wages 
are  about  twenty-three  cents  per  day.  In  Rus¬ 
sia  and  Italy,  which  of  civilized  countries  have 
the  lowest  railroad  mileage  in  proportion  to 
population  and  a  high  average  cost  per  ton 
mile  for  transportation,  the  average  wage  is 
only  thirty-four  and  twenty-six  cents  per  day, 
respectively.  In  Germany,  France  and  Eng¬ 
land,  which  approximate  each  other  in  the  aver¬ 
age  cost  of  transportation  per  ton  mile  and  in 
their  average  mileage  of  railroad  in  proportion  to 
their  population,  there  is  a  fair  approximation  in 
the  average  wage.  While  in  our  own  country, 
where  we  have  the  greatest  railroad  mileage  in 
proportion  to  our  population,  and  the  lowest 
cost  of  transportation,  we  have  the  highest 
average  wage  to  be  found  in  the  world,  the 
highest  wage  in  fact  of  which  there  is  any  re¬ 
cord  in  history. 

In  the  face  of  these  figures  it  is  impossible  to 
escape  the  conclusion  that  there  is  a  definite, 
fixed  relation  between  wages  and  the  facilities 
and  cost  of  transportation;  that  in  the  absence 
of  transportation  facilities  and  in  the  presence 
of  a  high  cost  or  rate  of  transportation,  indus¬ 
try  languishes,  labor  finds  little  to  do  and 
wages  remain  low.  While  as  transportation 


China  High¬ 
est  Rates, 
Lowest 
Wages. 


America 

Lowest 

Rates, 

Highest 

Wages. 


Relation 
Between 
Wages  and 
Transporta¬ 
tion. 


14 


Railroads  and  Wages 


Industrial 
Develop¬ 
ment  Due 
to  Railroad. 


What  High 
Rates 
Would 
Mean. 


facilities  increase  and  transportation  rates 
grow  lower  and  cheaper  industry  thrives,  mar¬ 
kets  widen,  commerce  grows  and  wages  in¬ 
crease  by  leaps  and  bounds. 

The  industrial  development  of  America,  the 
great  demand  for  labor  and  the  high  wages 
that  exist  in  our  country  to-day  are  due  pri¬ 
marily  to  our  wonderful  railroad  development 
and  to  the  wonderful  cheapness  of  our  trans¬ 
portation  rates.  It  is  a  mistake  to  imagine  that 
manufactures  can  thrive  or  agriculture  flourish 
in  advance  of  adequate  transportation  facilities. 
Were  the  farmers  of  Kansas  and  Minnesota 
compelled  to  pay  such  transportation  charges 
as  the  farmers  of  China,  it  would  cost  them 
$150  a  ton  to  ship  wheat  from  their  farms  to 
New  York,  or  $4,500  for  a  30-ton  car  holding 
1,100  bushels.  In  other  words,  their  wheat 
worth  only  60  cents  a  bushel  on  the  farm 
would  cost  $5.00  a  bushel  delivered  at  tide¬ 
water. 

Were  the  steel  mills  of  Pittsburg  compelled 
to  pay  only  as  much  as  the  manufacturer  of 
Japan  for  the  transportation  of  their  products 
to  market,  it  would  cost  them  $25  a  ton  to 
deliver  steel  rails  on  board  ship.  Pittsburg 
rails  costing  $25  a  ton  at  the  mill  would  cost 
$50  a  ton  in  New  York,  while  Chicago  rails 


Railroads  and  Wages 


15 


facing  a  transportation  charge  of  $50  a  ton 
would  have  to  be  manufactured  for  nothing  in 
order  to  compete  with  Pittsburg  rails  in  the 
Atlantic  Co~st  market. 

Neither  the  products  of  the  farm  nor  of  the 
factory  can  pay  such  charges  for  transportation 
to  market.  It  is  easy  to  see  that  industrial  de¬ 
velopment  in  competition  with  conditions  as 
we  know  them  in  America  is  impossible  in  a 
country  like  China  where  coal  mined  by  cheap 
Chinese  labor  at  a  cost  of  only  25  cents  per  ton 
at  the  mouth  of  the  mine  is  raised  by  the  mere 
cost  of  transportation  to  $8.00  per  ton  when 
transported  a  distance  of  less  than  forty  miles. 
Under  such  conditions  the  consumption  of  coal 
is  naturally  limited  to  a  small  radius  around 
each  mine  and  it  is  impossible  to  develop  any 
mining  industry.  The  miners  of  this  country 
should  recognize  the  fact  that  were  it  not  for 
the  wonderful  cheap  rates  made  by  our  Ameri¬ 
can  railroads  for  the  transportation  of  coal  that 
not  one  mine  in  one  hundred  would  be  open 
to-day  and  that  most  of  them  would  be  seeking 
employment,  as  are  the  inhabitants  of  most 
other  countries  at  wages  averaging  about  one- 
fourth  what  they  are  earning  to-day. 


Industrial 
Develop¬ 
ment  Im¬ 
possible. 


Mines  De¬ 
pendent  on 
Railroads. 


i6 


Railroads  and  Wages 


Transporta¬ 
tion  is 
China’s 
Problem. 


Develop 
ment  in 
Japan. 


Conditions 
in  Great 
Britain. 


With  her  utter  lack  of  transportation  facili¬ 
ties,  the  great  problem  of  China  for  centuries 
has  been  how  to  equalize  the  great  supply  of 
labor  that  has  existed  in  every  community  with 
the  limited  home  demand  for  it.  It  being  im¬ 
possible  to  manufacture  or  to  raise  food  pro¬ 
ducts  for  export,  each  community  in  China  has 
manufactured  only  what  it  could  itself  consume. 
The  community  has  preyed  upon  itself  and  the 
constantly  increasing  supply  of  labor  has  been 
met  by  a  steadily  decreasing  demand  for  it 
until  wages  have  been  reduced  to  the  lowest 
possible  point  at  which  human  existence  can 
be  maintained. 

In  contrast  with  the  labor  conditions  that 
exist  in  China  the  recent  railroad  development 
in  Japan  has  resulted  in  a  wonderful  rise  in 
wages.  Wages  have  increased  within  the  last 
twenty  years  from  an  average  of  eight,  ten, 
and  twelve  cents  per  day  to  twenty,  thirty  and 
forty  cents  per  day,  according  as  that  labor  is 
skilled  or  unskilled,  while  her  exports  to  foreign 
countries  have  increased  over  800  per  cent. 

The  reason  why  England  with  a  high  cost  of 
railroad  transportation  as  compared  with  Ger¬ 
many  and  France  is  still  able  to  pay  to  her 
labor  a  higher  wage  than  either  of  her  com¬ 
petitors,  is  due  to  the  extraordinary  amount  of 
cheap  water  transportation  facilities  that  she 


Railroads  and  Wages 


i7 


possesses  which  equalize  her  high  railroad  rates. 
In  our  country  it  is  well  known  that  as  the  rail¬ 
roads  have  reached  out  into  the  new  country, 
wages  have  steadily  increased  and  the  prices  of 
farm  products  have  steadily  risen.  Wages  have 
always  been  low  in  those  parts  of  the  country 
far  ahead  of  or  removed  from  railroad  facilities, 
and  to-day  the  lowest  wages  found  in  the 
United  States  are  in  those  States  which  have 
the  poorest  railroad  facilities.  Whenever  the 
railroads  came  into  a  new  community  the 
wages  almost  immediately  doubled.  The  fol¬ 
lowing  table,  showing  the  cost  of  transporta¬ 
tion  per  ton  mile  for  each  decade  of  the  last 
fifty  years  and  the  average  wage  of  American 
labor  at  the  same  time,  shows  what  the  in¬ 
crease  of  our  transportation  facilities  and  the 
reduction  of  our  railroad  rates  has  done  for 
American  labor: 


Cost  of  transportation 

per  ton  mile  Wages. 


Year.  in  cents.  per  day. 

1850  .  3.50  $1.23 

i860  .  2.74  1.50 

1870  .  1.99  1.97 

1880  .  1.26  2.13 

1890  .  .92  2.50 

1900  .  .69  2.60 


Wages 
Doubled 
in  United 
States. 


Railroad 
Rates  and 
Wages  in 
America. 


i8 


Railroads  and  Wages 


It  will  be  seen  that,  as  our  transportation 
rates  have  steadily  fallen,  the  wages  of  labor 
have  steadily  risen,  and  that,  too,  in  an  almost 
constant  proportion.  In  the  last  fifty  years  our 
railroad  mileage  has  grown  from  a  few  thousand 
miles  of  scattered  and  disconnected  links  into 
a  great  railroad  system  of  over  two  hundred 
thousand  miles.  Every  mile  of  which  is  in 
connection  with  every  other  mile,  equalizing 
labor  conditions  and  levelling  prices  through¬ 
out  the  whole  country,  preventing  either  local 
famine  or  local  waste  of  surpluses.  This  and 
the  reduction  during  that  same  period  of  our 
railroad  rates  from  3J4  cents  per  ton  mile  to  6.9 
mills  or  less  than  one-fifth  what  they  were  fifty 
years  ago,  has  enabled  us  to  accomplish  the 
greatest  miracle  that  the  world  has  ever  seen. 

A  Modern  During  those  fifty  years  our  population  has 

Miracle.  grown  from  23  million  to  over  76  million  and 
over  18  million  foreigners  have  emigrated  to 
our  shores.  Yet  in  the  face  of  this  great  supply 
of  labor,  and  most  of  it  extremely  cheap  labor, 
that  has  been  poured  in  upon  us,  we  have  been 
enabled  to  develop  our  industries  and  create 
such  a  demand  for  labor  that  we  have  more 
than  doubled  our  own  average  wage  and  at  the 
same  time  delivered  our  finished  products  in 
Europe  so  cheaply  that  Europe,  even  after  ship- 


Railroads  and  Wages 


19 


ping  its  surplus  supply  of  labor  to  us,  has  been 
unable  to  bring  about  any  material  increase  in 
its  own  wages. 

The  reason  that  the  iron  mills  of  Saxony 
have  been  idle  has  been  because  German  rail- 
read  rates  to  the  coast  have  been  more  than  the 
combined  charge  of  American  railroad  rates 
from  interior  points  to  our  sea  coast  and 
the  added  cost  of  transportation  across  the 
seas.  Why  do  the  industries  of  Germany  lan¬ 
guish?  It  is  because  the  government  control 
of  German  railroads  has  abolished  competition 
and  maintained  German  freight  rates  at  figures 
nearly  three  times  greater  than  those  fixed  by 
private  competition  here  in  America.  In  Amer¬ 
ica  the  necessity  for  lower  rates  forced  many 
roads  into  receiverships,  but  this  resulted  in  a 
scaling  of  their  debts  and  their  reorganization 
or  a  basis  which  lower  rates  were  able  to  support. 

This  relief,  however,  is  impossible  to  the 
government  owned  railroads  of  Europe,  for  the 
attempt  to  reduce  railroad  rates  based  upon  the 
present  capitalization  or  cost  of  those  roads  to 
their  governments  would  impair  at  once  the 
security  of  government  investments,  and  so 
the  German  laborer  must  struggle  for  a  wage 
scarcely  more  than  one-third  that  paid  to  the 
American  laborer  in  order  to  equalize  this  dif- 


Why  Ger¬ 
man  In¬ 
dustries 
Languish. 


Govern¬ 
ment  Con¬ 
trol  Pre¬ 
vents  Low 
Rates. 


20 


Railroads  and  Wages 


Wonderful 
Results  of 
Low  Rates* 


High 
Wages 
Produced 
by  Rail¬ 
roads. 


ference  which  prevails  in  the  freight  rates  of 
the  two  countries. 

It  is  almost  impossible  to  believe  some  of 
the  things  that  have  been  accomplished  and 
brought  about  by  the  wonderful  cheapness  of 
American  railroad  rates.  Of  what  use  was  it 
to  discover  that  California  could  raise  fruit  for 
the  whole  world  when  that  State  had  but  a 
population  of  1,500,000  to  consume  it?  But 
this  fact  becomes  of  great  importance  when  it 
is  known  that  by  reason  of  our  fast  freights 
and  cheap  railroad  rates,  California  apples  are 
shipped  across  the  Continent,  then  across  the 
Atlantic  and  sold  in  London  so  cheap  that 
Scottish  apples  paying  English  railroad  rates 
for  a  distance  of  only  600  miles,  are  unable  to 
compete  with  them.  It  is  useless  to  enumerate 
other  instances,  for  we  are  all  familiar  with 
them. 

Our  railroads  are  at  the  foundation  of  our 
industrial  prosperity.  Their  cheap  rates  for 
transportation  are  the  prime  factors  in  our 
industrial  supremacy,  and  it  is  time  forAmeri- 
can  labor  to  realize  it.  There  is  no  question 
but  that  the  high  standard  of  American  wages 
has  been  brought  about  and  made  possible  by 
our  low  transportation  charges.  Our  wages 
have,  in  fact,  continued  to  advance  until  the 
standard  is  so  high  that  in  many  branches  of 


Railroads  and  Wages 


21 


industry  it  is  becoming  difficult  to  maintain  our 
command  of  the  world's  market,  the  struggle 
for  which  is  growing  fiercer  with  each  day. 
Europe,  still  thirty  years  behind  us  in  transpor¬ 
tation  rates,  which  she  has  heretofore  equalized 
by  low  wages,  is  reaching  after  us  and  a  better 
development  of  transportation  facilities  is 
going  on  in  all  her  different  countries. 

The  American  laborer  must  recognize  the 
fact  that  without  other  relief  he  must  stand  a 
reduction  in  wages  or  lose  control  of  the  mar¬ 
ket.  To  lose  control  of  the  market  means  that 
the  price  of  the  finished  product  will  be  made 
by  another  nation  than  our  own  and  that  our 
profits  for  manufactures  will  be  reduced  to  the 
vanishing  point.  This  means  to  subject  the 
whole  race  of  American  laboring  men  to  the 
domination  of  foreign  competition.  There  is 
no  possible  way  of  maintaining  our  domination 
of  the  world's  markets  except  by  a  reduction 
of  wages  or  by  a  still  further  reduction  of  the 
cost  of  transportation.  Our  laboring  people 

must  therefore  recognize  that  their  only  hope, 
not  only  of  better  pay,  but  even  of  maintaining 
their  present  industrial  position,  depends  upon 
the  ability  of  our  railroads  to  continue  as  they 
do  to-day  to  deliver  our  manufactured  products 
at  a  cost  which  defies  competition. 


Markets 
Endangered 
by  High 
Wages. 


22 


Railroads  and  Wages 


Burdens  on 
Railroads 
Fall  Upon 
Labor. 


Labor  De¬ 
pends  on 
Railroads. 


This  being  true,  it  follows  that  anything 
which  hampers  or  interferes  with  these  trans¬ 
portation  facilities  will  interfere  and  fall  with 
double  weight  upon  the  labor  whose  products 
are  to  be  transported.  That  every  imposition 
laid  upon  our  transportation  systems  is  an  im¬ 
position  upon  labor  itself;  that  every  advantage 
taken  from  these  transportation  facilities  robs 
the  labor  that  benefits  by  low  railroad  rates; 
that  every  tax  and  burden  laid  upon  our  trans¬ 
portation  facilities  is  doubly  a  tax  and  a  burden 
upon  labor  which  is  at  the  mercy  of  these  same 
transportation  facilities  to  find  a  market  for  its 
products. 

Every  obstacle  placed  in  the  way  of  cheapening 
the  cost  of  transportation  prevents  and  makes 
impossible  any  rise  in  wages.  It  is  surprising 
when  our  attention  is  called  to  the  manner  in 
which  we  have  hampered  and  burdened  our 
railroads  that  we  have  succeeded  as  we  have. 
It  is  time  for  our  laboring  men  to  recognize 
that  their  future  is  inseparably  bound  up  with 
that  of  the  railroads  of  our  country.  It  is  these 
railroads  that  have  enabled  our  workingmen 
and  mechanics  to  fatten  off  the  work  that  they 
are  doing  for  the  whole  world  while  foreign 
workmen  are  idle  and  all  Europe  is  wildly  pro¬ 
testing  against  the  American  invasion.  If  our 


Railroads  and  Wages 


23 


railroad  rates  were  doubled,  at  which  figu re 
they  would  still  be  lower  than  those  of  any 
other  country  in  the  world,  it  would  close  al¬ 
most  every  mill  and  factory  in  our  country 
away  from  tidewater. 


In  order  to  maintain  our  position,  railroad 
rates  will  doubtless  become  even  cheaper  than 
they  are  to-day.  But  it  is  to  be  hoped  that  this 
will  not  be  accomplished  by  the  reduction  of 
the  wages  of  railroad  laborers  to  the  standard 
of  Germany,  whose  railroads  only  pay  their 
engineers  and  firemen  a  wage  ranging  from 
eight  to  ten  cents  per  hour  for  a  ten  hour  day, 
and  whose  laborers  work  for  a  pittance  of  from 
five  to  seven  cents  per  hour. 

When  it  is  recognized  how  completely  labor 
and  industry  are  dependent  upon  these  great 
railroad  systems  for  transportation  all  parties 
should  join  in  endeavoring  to  secure  for  our 
great  transportation  systems  every  facility  for 
still  further  reducing  their  cost  of  operation 
and  so  make  possible  the  lowering  of  their 
already  marvellously  low  transportation  rates. 

Were  it  possible,  our  railroads  should  be 
relieved  from  taxation.  Not  only  should  every 
obstacle  in  the  way  of  their  combination  or  con¬ 
solidation  for  the  purpose  of  securing  greater 
economies  of  operation  be  removed,  but  very 


Lower 

Rates 

Possible 

Without 

Lower 

Wages. 


Labor 
Must  Se¬ 
cure  Relief 
for  Rail¬ 
roads. 


24 


Railroads  and  Wages 


Taxation  of 
Railroads 
Should 
Stop. 


Labor 

Should 

Recognize 

Debt. 


facility  therefor  should  be  offered,  for  the  only 
alternative  is  a  reduction  in  wages.  Every 
known  and  conceivable  legitimate  scheme  or 
plan  to  secure  the  best  through  connections 
should  be  urged  in  order  that  the  straightest, 
shortest  and  fastest  lines  obtainable  may  carry 
our  enormous  surpluses  in  the  greatest  tram 
loads  ever  seen  into  the  markets  of  the  world. 

And  labor  instead  of  antagonizing  and  fight¬ 
ing-^  great  railroads  should  recognize  its 
great  debt  to  them  for  its  present  prosperity 
and  still  more  its  dependence  upon  them  for  the 
future  continuance  of  the  same.  Our  whole 
people  should  join  in  securing  every  reasonable 
immunity  from  taxation  or  oppressive  regula¬ 
tions  for  our  great  transportation  systems,  so 
that  as  we  have  used  them  to  attain  our  present 
position  in  the  industrial  world,  we  may,  by 
removing  all  obstacles  from  their  way,  make 
them  the  means  of  maintaining  American  wages 
at  their  present  high  standard  and  at  the  same 
time  secure  for  American  labor  its  rightful 
heritage7~ the  markets  of  the  world  and  the 
industrial  supremacy  of  the  earth. 


AUG  Z  191 1 


